Issue of the week: Is Amazon’s Fire an iPad killer?

Amazon’s new Kindle Fire tablet arrives on the market as the anti-iPad, said Bianca Bosker in HuffingtonPost.com. With a price tag of $199, the “functional, but not fabulous,” Fire is less than half the price of Apple’s blockbuster. The rest of the tablet pack—Motorola, Samsung, and Sony—have all created devices that tried to best the iPad by “offering more bells and whistles” at the same high price, and they’ve barely nicked Apple’s dominance. Amazon has tried a different tack: a bare-bones design with a “wallet-friendly price tag.” Will it work?

The Fire has revolutionary potential, said Farhad Manjoo in Slate.com. Sure, it’s got some bugs: By iPad standards, it feels “chintzy and ungainly in your hands,” the navigation is poor, and its speakers are flat-out terrible. But I still “managed to do pretty much everything that I like to do on my iPad” on the Fire. And none of the new tablet’s problems “outweighs its one overriding advantage: It’s supercheap.” And it will get cheaper: Amazon’s CEO, Jeff Bezos, “is always slashing prices,” and sooner or later Apple will have to respond in kind.

The Fire is designed around one aim: “consuming—and ultimately buying—digital media,” said Jon Phillips in Wired.com. To that end, Amazon has created “a fiendishly effective shopping portal in the guise of a 7-inch slate.” Amazon’s intentions are clear: It’s willing to sell each Fire at a loss so it can lock users in to its retail ecosystem, making “back all its money (and then some) by selling untold petabytes of content”—movies, music, books, and games—from its own digital storefront.

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In pursuing that classic “razors and blades” strategy, Amazon should take care not to get cut, said Dan Mitchell in Fortune.com. The idea that if “you give away a razor, you can make up the loss by selling lots of blades” only makes sense when you have either high margins or a monopoly on blades. On the ubiquitous media it hopes to market, Amazon has neither. Consumers can buy movies and video games anywhere, and competition keeps margins razor-thin. Since Amazon is losing money on every Fire it sells, the only real competitive edge it has is “the quality of its store.” Customers are drawn to Amazon only partly by its vast selection; its main attraction is its market-beating discounts. The Fire may increase sales volumes, but Amazon’s continued reliance on offering the lowest prices could slice “deeply into profits.”